Theories Of Globalisation In International Business

“Globalization is a process that encompasses the causes, course, and consequences of transnational and transcultural integration of human and non-human activities.” (Rodhan, A. 2006) Globalisation is a process which plays a major role in the business world today and largely effects the way in which managers run an organisation. It is not a process which can easily be defined and there are various concerns and arguments for and against globalisation as a process. Globalisation in business involves various different processes including economic integration; transfer of policies and cultural stability (Rodhan, A. 2006) If a business is to become global then there are various different disciplines that must be considered, whether they involve economic, …show more content…
When first introduced, the theory itself was first developed In order to grasp an understanding as to why some countries where more successful in particular industries than others (Smit, A. 2010) Porter introduced four classes of attributes in order to discover the competitive advantage of a nation. ‘’These four factors included; factor conditions, demand conditions, related and support industries, and company strategy, structure and rivalry’’ (Smit, A. 2010) Looking first at factor conditions which Porter defined as land, labour and capital. Also included in factor conditions where human, knowledge, physical and capital resources. (Porter, M. 1990) Factor conditions are also split in two sections known as basic and advanced; basic factors were seen as unskilled labour and raw materials and were seen as to require little or no investment in the production process. (Smit, A. 2010) Next to be looked at in Porters Diamond Theory is that of demand conditions. Porter perceived demand conditions as a source of competitive advantage for a country for example different demand in countries could lead on to determining whether an economy could return increased return on investment. (Smit, A. 2010) In terms of related and support industries, seen as some as the most important aspect of the Diamond Theory (Teece 1996) it relates to external economies of which that are related, that display learning, innovation and operating activity. Last to feature on Porters theory was that of strategy, structure and rivalry. Its main emphasis is to display that strategies and structures of an organisation can depend heavily on a national environment and that there lie various systematic differences in each country which ultimately decides their competitive advantage. (Smit, A. 2010) Porters Diamond Theory has been labelled a valuable tool in business which